US October Beef Production Up

US commercial beef and pork production rose in October, sending more meat into the market or commercial freezers, yet prices for both held above last year, although beef did a better job of it.

October beef production totaled 2.3 billion pounds, up 80 million, or 3.60%, from 2.22 billion in September and the second-largest production month of 2017 so far.

Monthly beef production has been above the corresponding 2016 month in all months except April when 1.963 billion pounds fell slightly short of April 2016’s 1.964 billion.

This year’s beef production showed an anomaly in that monthly production peaked in August rather than in October, as the 2011-2015 average showed.  The August peak was 2.401 billion pounds, up 135 million, or 5.96%, from 2.266 billion a year ago and up 210 million, or 9.58%, from the previous five-year average of 2.191 billion.

November beef production could climb from October as it did last year, but the trend is for beef production to decline in the colder months.

 

BEEF PRICES HOLD STRONG

 

However, weekly wholesale beef prices are strong, especially for choice-graded product.  The USDA’s weekly average boxed beef cutout value shows a decline for the last two weeks as it challenged resistance at the 2011-2015 average.  Still, it held well above last year.

For instance, last week’s average cutout of $208.70 per cwt was up $22.40, or 12.0%, from $186.30 a year ago but down $1.18, or 0.56%, from the previous five-year average of $209.88.

Broken down, USDA-AMS data show that wholesale beef ribeye prices are showing unseasonable strength and are on their way to topping last year’ peak of $9.34 a pound, set the first week of December.

For the first week of November, wholesale ribeye prices averaged $8.51 a pound, up from $8.06 a week earlier, $7.79 a pound a year earlier and the previous five-year average of $7.74 a pound.

Wholesale chuck prices were near their October highs, but were hovering on the precipice of a sharp seasonal sell-off.  Prices typically soften the last week of October and then drop sharply into mid-December where grocers again show some interest in booking the more mundane cuts for January features.

Boneless beef prices also are showing seasonal price moves at the wholesale level.  Good weather across much of the US and a flurry of holiday shopping brings consumers out in droves.  Many of these shoppers will stop in for a burger when they wouldn’t even be out if it weren’t for Christmas shopping.

Looking ahead, boneless beef prices likely will hold some strength through January.  Early in the year, 90% lean beef likely will show some seasonal strength as cow slaughter declines.  Choice ribeyes also may move higher as production struggles and orders come in for spring needs.

 

CATTLE, BEEF RECAP

 

Cash cattle trading began last week at $118 per cwt on a live basis, down $1 from the bulk of last week’s action.  However, more trade came late at $120 to $120.50, up $1 to $1.50.  Dressed-basis trading was at mostly $189, up to $190, steady to up $1.

The USDA’s choice cutout Tuesday was down $0.94 per cwt at $208.63, while select was off $0.08 at $187.20.  The choice/select spread narrowed to $21.43 from $22.29 with 131 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Monday was $156.75 per cwt, down $1.49.  This compares with Tuesday’s Jan settlement at $154.50 per cwt, up $0.05.